Discuss the Nature and Scope of Micro Economics.
Meaning of Microeconomics:-
Microeconomics is the branch of economics that deals with the behavior of an individual Consumer, firm and family is known as Microeconomics. Microeconomics is concerned with the analysis of individuals, households study and firm’s behavior in decision making and apportioned of Scarce Resources for the objective of satisfying unlimited wants to individuals and households.
Definition of Microeconomics:-
According to Prof. Samuelson:- “Microeconomics studies the behavior of individual parts and units of any economy, e. g., determination of the price of a product or study and observation of the behavior of a consumer or a firm”.
IN Others words:- Microeconomics is the part of economics concerned with single factors and the effects of individual decisions. In microeconomics decisions are taken regarding allocation of scarce resources and interactions among these individuals and firms. Now we will know nature and scope of microeconomic.
Nature of Microeconomics:- The ‘MICRO’ word is derived from the Greek word ‘MIKROS‘, which means “Small”. The micro denotes the millionth part of a thing. Thus, it means the smallest unit of anything.
1.Individual Units :- Microeconomics deals with the individual units as ( Individuals persons, Firm, Households ). It doesn’t include aggregate rather it expresses individual needs and factors.
2. Factors and effects:- Microeconomics deals with the factors of production, distribution, cost and prices. After finding its facts it deals with its effects for example price effect on demand as well as Cost effect on price of the products. nature and scope of microeconomics
3. Individual economic Choices:- It expresses individual choices among different persons and households. Because everyone has different choices among many alternative things.
4. What to produce:- Microeconomics deals with the type of product as what to produce in the market. So the needs of customers are analyzed before production. After it essential products are produced.
5. For whom produce:- Microeconomics deals with the category of consumer to whom products are produced. Because it’s not sufficient to produced anything but particularly needs of different customers are different as per their preference and taste. nature and scope of microeconomics
6. How to produce:- Microeconomics deals with the process or methods of production. As it tells how to produce products in a better way using limited resources for unlimited wants.
SCOPE OF MICROECONOMICS
Microeconomics studies the economic actions and behavior of individual units, households and small firm units. It analyzes the small component of the economy. It expresses the relationship between facts and results, which are called economics laws. Its Scope includes Production, Cost, Distribution, Demand and Supply concerned with the products and firms. Let’s know nature and scope of microeconomics
1.Theory of Demand:- It indicates how much quantity of a commodity will be demanded at its different prices by different individuals, households and firms. Demand is defined as the quantity of a product which a consumer is not only desiring to purchase and able to purchase but is also ready to purchase at given prices at a given point of time.
2. Supply:- Microeconomics deals with the supply. So if supply is more in the market then price will decline. In reverse it if supply is low then price will be high. So it can be understood by analyzing the supply and demand. So for remaining in business every firm has to provide quality products to satisfy the customers. nature and scope of microeconomics
3. Pricing Factor :- Microeconomics also established the relationship between supply and demand where price is determined itself by market conditions. Demand for everything is influenced by its price. If the price is high then demand is low. And reverse it. Every demand is influenced by its price. So the price of every individual good or service is considered in the microeconomics.
3. Theory of production:- Production decision refers to the decision of a producer to combine inputs or factors of production to produce output so as to maximize profits. Theory of production analysis how a producer or a firm should use its resources efficiently so as to get maximum profit. Goods are produced By using limited resources for satisfying their unlimited wants.
4. Distribution:- Microeconomic deals also with the distribution of goods among different groups of firms and individuals as per their needs. So their wants are satisfied by providing them appropriate goods. nature and scope of microeconomics
5. Economic welfare:- Microeconomics provides welfare for all individuals in an economy. Microeconomics not only consider production, prices, supply, demand and distribution of goods for people. It also considered economic welfare for the society in an economy. Provide valid prices as per cost, quality product and content in goods.
Conclusion:- Thus, Nature of Microeconomics deals with individual households and firms. Which utilized limited resources for satisfying unlimited wants of individuals, people and firms. Its scope covers Theory of demand, Distribution, production functions, Demand and Supply and Welfare of people. Thus its analysis of all these at a small level. nature and scope of microeconomics
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